<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file Number 0-14681
J. BAKER, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2866591
(State of Incorporation) (I.R.S. Employer Identification Number)
555 Turnpike Street, Canton, Massachusetts 02021
(Address of principal executive offices)
(617) 828-9300
(Registrant's telephone number, including area code)
The registrant (1) has filed all reports to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such period that the registrant was
required to file such reports), and (2) has been subject to filing
such reports for the past 90 days.
YES [ X ] NO [ ]
The number of shares outstanding of the registrant's common stock
as of July 29, 1995 was 13,858,626.
<PAGE>2
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
July 29, 1995 (unaudited) and January 28, 1995
<TABLE>
<S> <C> <C>
July 29, January 28,
Assets 1995 1995
------- ------------ ------------
Current assets:
Cash and cash equivalents $ 1,860,980 $ 4,915,491
Accounts receivable 28,424,670 25,549,504
Merchandise inventories 356,082,715 333,686,950
Prepaid expenses 10,020,912 8,121,922
Deferred income taxes 2,120,000 2,120,000
----------- -----------
Total current assets 398,509,277 374,393,867
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 25,039,191 24,988,513
Furniture, fixtures, machinery
and equipment 127,442,442 116,900,087
Leasehold improvements 54,195,251 47,448,521
----------- -----------
206,676,884 189,337,121
Less accumulated depreciation 68,447,955 58,271,956
----------- -----------
Net property, plant
and equipment 138,228,929 131,065,165
----------- -----------
Other assets 70,432,281 73,159,234
----------- -----------
$607,170,487 $578,618,266
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,500,000 $ 1,500,000
Accounts payable 115,469,833 120,792,457
Accrued expenses 11,368,937 15,504,950
Income taxes payable - 472,357
----------- -----------
Total current liabilities 128,338,770 138,269,764
----------- -----------
Deferred income taxes 6,136,000 6,136,000
Other liabilities 4,231,369 6,377,762
Long-term debt, net of
current portion 168,700,000 128,300,000
Senior subordinated debt 4,388,772 5,864,835
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 225,022,576 223,316,905
----------- -----------
$607,170,487 $578,618,266
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>3
J. BAKER, INC. AND SUBSIDIARIES
Statements of Consolidated Earnings
For the quarters ended July 29, 1995 and July 30, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
Quarter Quarter
Ended Ended
July 29, 1995 July 30, 1994
------------- -------------
Sales $272,520,039 $256,335,724
Cost of sales 152,317,734 139,046,302
----------- -----------
Gross profit 120,202,305 117,289,422
Selling, administrative and
general expenses 107,353,920 97,864,823
Depreciation and amortization 7,713,000 6,042,895
----------- -----------
Operating income 5,135,385 13,381,704
Net interest expense 2,864,173 2,235,389
----------- -----------
Earnings before income taxes 2,271,212 11,146,315
Taxes on earnings 874,000 4,013,000
---------- ----------
Net earnings $ 1,397,212 $ 7,133,315
========== ==========
Net earnings per common share:
Primary $ 0.10 $ 0.52
========== ==========
Fully diluted $ 0.10 $ 0.43
========== ==========
Number of shares used to compute net
earnings per common share:
Primary 13,847,954 13,833,796
========== ==========
Fully diluted 13,932,754 18,409,255
========== ==========
Dividends declared per share $ 0.015 $ 0.015
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>4
J. BAKER, INC. AND SUBSIDIARIES
Statements of Consolidated Earnings
For the six months ended July 29, 1995 and July 30, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months Six Months
Ended Ended
July 29, 1995 July 30, 1994
------------- -------------
Sales $503,904,731 $477,674,184
Cost of sales 280,170,560 263,165,570
----------- -----------
Gross profit 223,734,171 214,508,614
Selling, administrative and
general expenses 200,455,610 182,415,395
Depreciation and amortization 14,684,000 11,512,712
----------- -----------
Operating income 8,594,561 20,580,507
Net interest expense 5,286,696 4,438,407
----------- -----------
Earnings before income taxes 3,307,865 16,142,100
Taxes on earnings 1,273,000 5,811,000
----------- -----------
Net earnings $ 2,034,865 $ 10,331,100
=========== ===========
Net earnings per common share:
Primary $ 0.15 $ 0.75
=========== ===========
Fully diluted $ 0.15 $ 0.65
=========== ===========
Number of shares used to compute net
earnings per share:
Primary 13,846,875 13,823,597
=========== ===========
Fully diluted 13,945,852 18,419,272
=========== ===========
Dividends declared per share $ 0.030 $ 0.030
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>5
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the quarters ended July 29, 1995 and July 30, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
July 29, 1995 July 30, 1994
------------- -------------
Cash flows from operating activities:
Net earnings $ 2,034,865 $ 10,331,100
Adjustments to reconcile net
earnings to net cash used
in operating activities:
Depreciation and amortization:
Fixed assets 10,176,000 7,699,285
Deferred charges, intangible
assets and deferred
financing costs 4,531,937 3,839,661
Change in:
Accounts receivable (2,467,552) (518,555)
Merchandise inventories (22,395,765) (54,180,557)
Prepaid expenses (1,898,990) (1,014,022)
Accounts payable (5,322,624) (2,106,988)
Accrued expenses (4,136,013) (9,587,437)
Income taxes payable (879,971) 5,033,009
Other liabilities (2,086,561) (217,073)
---------- ----------
Net cash used in operating
activities (22,444,674) (40,721,577)
----------- -----------
Cash flows from investing activities:
Capital expenditures for:
Property, plant and equipment (17,339,764) (25,170,272)
Other assets (3,290,879) (1,889,521)
Payments received on note receivable 1,450,000 -
----------- -----------
Net cash used in
investing activities (19,180,643) (27,059,793)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 40,400,000 65,900,000
Payment of senior subordinated debt (1,500,000) -
Proceeds from issuance of
common stock 86,228 385,125
Payment of dividends (415,422) (414,945)
----------- -----------
Net cash provided by
financing activities 38,570,806 65,870,180
----------- -----------
Net decrease in cash (3,054,511) (1,911,190)
Cash and cash equivalents at
beginning of year 4,915,491 3,584,032
----------- -----------
Cash and cash equivalents at
end of period $ 1,860,980 $ 1,672,842
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,729,970 $ 4,753,554
=========== ===========
Cash paid for income taxes, net $ 2,152,971 $ 2,923,516
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>6
J. BAKER, INC. AND SUBSIDIARIES
NOTES
1] The accompanying unaudited consolidated financial statements,
in the opinion of management, include all adjustments (which
consist only of recurring accruals) necessary for a fair
presentation of the Company's financial position and results of
operations. The results for the interim periods are not
necessarily indicative of results that may be expected for the
entire fiscal year.
2] Primary earnings per share is based on the weighted average
number of shares of Common Stock outstanding during such period.
Stock options and warrants are excluded from the calculation since
they have less than a 3% dilutive effect.
Fully diluted earnings per share is based on the weighted
average number of shares of Common Stock outstanding during such
period. Included in this calculation is the dilutive effect of
stock options and warrants. The calculation for the quarter and
six months ended July 30, 1994 also included the dilutive effect of
common stock issuable under the 7% convertible subordinated notes
due 2002. The common stock issuable under the 7% convertible
subordinated notes were not included in the calculation for the
quarter and six months ended July 29, 1995 because they were
antidilutive.
3] On September 5, 1995, the Company announced its intent to
dispose of its Fayva footwear division by the end of fiscal 1996.
The Company expects that the disposal of the division should result
in a positive impact on liquidity, although there will be a
significant one-time restructuring charge to earnings which is
anticipated to be recorded in the third quarter of fiscal 1996 once
the Company is able to reasonably estimate the value of the charge.
The impact on liquidity and the size of the charge will depend, in
part, on the value the Company is able to realize from the
liquidation of existing Fayva inventory and fixed assets and the
disposition of the Fayva store leases.
4] On June 23, 1995, Bradlees Stores, Inc. ("Bradlees"), a
licensor of the Company, filed for protection under Chapter 11 of
the Bankruptcy Code. At the time of the bankruptcy filing, the
Company had outstanding accounts receivable of approximately $1.9
million due from Bradlees. Under bankruptcy law, Bradlees has the
option of continuing (assuming) the existing license agreement with
the Company or terminating (rejecting) that agreement. If the
license agreement is assumed, Bradlees must cure all defaults under
the agreement and the Company will collect in full the outstanding
past due receivable. The Company has no assurance that the
agreement will be assumed or that Bradlees will continue in
business. Although the Company believes that the rejection of the
license agreement or the cessation of Bradlees' business is not
probable, in the event that the agreement is rejected or Bradlees
does not continue in business, the Company believes it will have a
substantial claim for damages. If such a claim is necessary, the
amount realized by the Company, relative to the carrying values of
Bradlees-related assets, will be based on the relevant facts and
circumstances. The Company does not expect this filing under the
Bankruptcy Code to have a material adverse effect on future
earnings. The Company's sales in the Bradlees chain for the
quarter and six months ended July 29, 1995 were $16.0 million and
$28.6 million, respectively.
5] On November 10, 1993, a federal jury in Minneapolis, MN
returned a verdict assessing royalties of $1,550,000, and
additional damages of $1,500,000 against the Company in a patent
infringement suit brought by Susan Maxwell with respect to a device
used to connect pairs of shoes. Certain post trial motions were
filed by Susan Maxwell seeking treble damages, attorney's fees and
injunctive relief, which motions were granted on March 10, 1995.
Judgment has been entered for Maxwell. The Company has appealed
the judgment and believes it has substantial legal arguments to
justify the judgment being overturned at the appellate level. In
the event the Company were not to prevail, however, total damages,
including attorney's fees and interest, are estimated to be
approximately $10 million.
A complaint was also filed by Susan Maxwell in November, 1992
against Morse Shoe, Inc. ("Morse"), a subsidiary of the Company,
alleging infringement of the patent referred to above. The
discovery phase of the case has concluded, but a trial date has not
yet been set. The Company believes that Ms. Maxwell's recovery
against Morse, if any, will be less than her recovery against the
Company because the number of allegedly infringing pairs of shoes
is substantially less than those involved in the Company's case.
<PAGE>7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
All references herein to fiscal 1996 and fiscal 1995 relate to
the years ending February 3, 1996 and January 28, 1995,
respectively.
Results of Operations
First Six Months Fiscal 1996 versus First Six Months Fiscal 1995
Net sales increased by $26.2 million to $503.9 million in the
first six months of fiscal 1996 from $477.7 million in the first
six months of fiscal 1995. Sales in the Company's footwear
operations increased by $9.9 million primarily due to a sales
increase in the Company's SCOA licensed shoe division as a result
of SCOA's acquisition of new licensed departments during the last
three quarters of fiscal 1995, coupled with an increase in the
number of Parade of Shoes stores in operation during the first six
months of fiscal 1996 versus the first six months of fiscal 1995.
The sales increase in footwear operations was partially offset by
a 4.2% decrease in comparable retail footwear store sales
(Comparable retail footwear sales increases/decreases are based
upon comparisons of weekly sales volume in licensed departments and
Parade of Shoes and Fayva shoe stores which were open in
corresponding weeks of the two comparison periods.), a decrease in
the number of discount licensed shoe departments and Fayva shoe
stores in operation during the first six months of fiscal 1996
versus the first six months of fiscal 1995, and a $17.1 million
decrease in wholesale footwear sales (which is the result of the
closing of all wholesale footwear departments serviced by the
Company during the second quarter of fiscal 1995). Sales in the
Company's specialty apparel operations increased by $16.3 million
due to an increase in the number of Casual Male Big & Tall stores
and Work 'n Gear stores in operation during the first six months of
fiscal 1996 over the first six months of fiscal 1995, partially
offset by a 1.8% decrease in comparable specialty apparel store
sales. (Comparable specialty apparel store sales
increases/decreases are based upon comparisons of weekly sales
volume in Casual Male Big & Tall stores and Work 'n Gear stores
which were open in corresponding weeks of the two comparison
periods.)
Cost of sales constituted 55.6% of sales in the first six
months of fiscal 1996 as compared to 55.1% of sales in the first
six months of fiscal 1995. Cost of sales in the Company's footwear
operations was 57.0% of sales in the first six months of fiscal
1996 as compared to 56.1% of sales in the first six months of
fiscal 1995. The increase in such percentage was primarily
attributable to higher markdowns as a percentage of sales and a
decrease in the initial markup on merchandise purchases, partially
offset by the elimination of wholesale footwear sales, which have
a higher cost of sales than retail sales. Cost of sales in the
specialty apparel operations was 50.7% of sales in the first six
months of fiscal 1996 as compared to 51.0% of sales in the first
six months of fiscal 1995 primarily due to a higher initial markup
on merchandise purchases, partially offset by higher markdowns as
a percentage of sales.
Selling, administrative and general expenses increased $18.0
million or 9.9% in the first six months of fiscal 1996 as compared
to the first six months of fiscal 1995 primarily due to an increase
in the number of licensed departments, Parade of Shoes and
specialty apparel stores in operation, partially offset by a
decrease in overhead expenses. As a percentage of sales, selling,
administrative and general expenses were 39.8% in the first six
months of fiscal 1996 as compared to 38.2% in the first six months
of fiscal 1995. Selling, administrative and general expenses in
the Company's footwear operations were 38.7% of sales in the first
six months of fiscal 1996 as compared to 37.2% of sales in the
first six months of fiscal 1995. This increase was primarily due
to the elimination of wholesale footwear sales, partially offset by
a relative increase in licensed footwear sales, which have lower
selling, administrative and general expenses than those in the
Company's Parade of Shoes and Fayva divisions. Selling,
administrative and general expenses in the Company's specialty
apparel operations were 43.7% of sales in the first six months of
fiscal 1996 as compared to 42.1% in the first six months of fiscal
1995 primarily due to an increase in store level expenses.
Depreciation and amortization expense increased by $3.2
million in the first six months of fiscal 1996 as compared to the
first six months of fiscal 1995 due to an increase in depreciable
and amortizable assets.
<PAGE>8
As a result of the above described effects, the Company's
operating income decreased by 58.2% to $8.6 million in the first
six months of fiscal 1996 from $20.6 million in the first six
months of fiscal 1995. As a percentage of sales, operating income
was 1.7% in the first six months of fiscal 1996 as compared to 4.3%
in the first six months of fiscal 1995.
Net interest expense increased $848,000 to $5.3 million in the
first six months of fiscal 1996 from $4.4 million in the first six
months of fiscal 1995 primarily due to higher levels of borrowings
and higher interest rates.
Taxes on earnings for the first six months of fiscal 1996 were
$1.3 million, yielding an effective tax rate of 38.5%, as compared
to taxes of $5.8 million, yielding an effective tax rate of 36.0%
in the first six months of fiscal 1995.
Net earnings for the first six months of fiscal 1996 were $2.0
million as compared to net earnings of $10.3 million in the first
six months of 1995, a decrease of 80.3%.
Second Quarter Fiscal 1996 versus Second Quarter Fiscal 1995
Net sales increased by $16.2 million to $272.5 million in the
second quarter of fiscal 1996 from $256.3 million in the second
quarter of fiscal 1995. Sales in the Company's footwear operations
increased by $7.7 million primarily due to a sales increase in the
Company's SCOA licensed shoe division as a result of SCOA's
acquisition of new licensed departments during the last three
quarters of fiscal 1995, coupled with an increase in the number of
Parade of Shoes stores in operation during the second quarter of
fiscal 1996 versus the second quarter of fiscal 1995. This
increase was partially offset by a $4.1 million decrease in
wholesale footwear sales (which is a result of the closing of all
wholesale footwear departments serviced by the Company during the
second quarter of fiscal 1995), a decrease in the number of
discount licensed and Fayva shoe stores in operation during the
second quarter of fiscal 1996 versus the second quarter of fiscal
1995 and a 2.8% decrease in comparable retail footwear sales.
Sales in the Company's specialty apparel operations increased by
$8.5 million due to an increase in the number of Casual Male Big &
Tall stores and Work 'n Gear stores in operation during the second
quarter of fiscal 1996 over the second quarter of fiscal 1995,
partially offset by a 2.6% decrease in comparable specialty apparel
store sales.
Cost of sales constituted 55.9% of sales in the second quarter
of fiscal 1996 as compared to 54.2% of sales in the second quarter
of fiscal 1995. Cost of sales in the company's footwear operations
was 57.3% of sales in the second quarter of fiscal 1996 as compared
to 55.2% of sales in the second quarter of fiscal 1995. The
increase in such percentage is primarily attributable to an
increase in markdowns as a percentage of sales. This increase was
partially offset by the elimination of wholesale sales, which have
a higher cost of sales than retail sales. Cost of sales in the
Company's specialty apparel operations was 50.6% of sales in the
second quarter of fiscal 1996 as compared to 50.2% of sales in the
second quarter of fiscal 1995 primarily due to higher markdowns as
a percentage of sales, partially offset by a higher initial markup
on purchases.
Selling, administrative and general expenses increased $9.5
million or 9.7% in the second quarter of fiscal 1996 as compared to
the second quarter of fiscal 1995 primarily due to an increase in
the number of licensed departments, Parade of Shoes and specialty
apparel stores in operation. As a percentage of sales, selling,
administrative and general expenses were 39.4% in the second
quarter of fiscal 1996 as compared to 38.2% in the second quarter
of fiscal 1995. Selling, administrative and general expenses in
the Company's footwear operations were 38.1% of sales in the second
quarter of fiscal 1996 as compared to 37.3% of sales in the second
quarter of fiscal 1995. This increase was due to the elimination
of wholesale footwear sales and a relative decrease in discount
licensed footwear sales, which have lower selling, administrative
and general expenses than those in the Company's Parade of Shoes,
Fayva and SCOA divisions. Selling, administrative and general
expenses in the Company's specialty apparel operations were 44.2%
of sales in the second quarter of fiscal 1996 as compared to 41.8%
in the second quarter of fiscal 1995 primarily due to an increase
in store level expenses.
Depreciation and amortization expense increased by $1.7
million in the second quarter of fiscal 1996 as compared to the
second quarter of fiscal 1995 due to an increase in depreciable and
amortizable assets.
As a result of the above described effects, the Company's
operating income decreased by 61.6% to $5.1 million in the second
quarter of fiscal 1996 from $13.4 million in the second quarter of
fiscal 1995. As a percentage of sales, operating income was 1.9%
in the second quarter of fiscal 1996 as compared to 5.2% in the
second quarter of fiscal 1995.
<PAGE>9
Net interest expense increased $629,000 to $2.9 million in the
second quarter of fiscal 1996 from $2.2 million in the second
quarter of fiscal 1995 primarily due to higher levels of borrowings
and higher interest rates.
Taxes on earnings for the second quarter of fiscal 1996 were
$874,000, yielding an effective tax rate of 38.5%, as compared to
taxes of $4.0 million, yielding an effective tax rate of 36.0% in
the second quarter of fiscal 1995.
Net earnings for the second quarter of fiscal 1996 were $1.4
million as compared to net earnings of $7.1 million in the second
quarter of fiscal 1995, a decrease of 80.4%.
Financial Condition
July 29, 1995 versus January 28, 1995
The increase in accounts receivable at July 29, 1995 from
January 28, 1995 is primarily due to seasonal factors, licensed
sales in July being higher than licensed sales in January.
Merchandise inventories at July 29, 1995 were higher than at
January 28, 1995 primarily due to a seasonal increase in the
average inventory level per location and a net increase of 63 in
the number of stores and licensed departments in operation. The
increase in merchandise inventories at July 29, 1995 versus the
balance at January 28, 1995 was lower than the increase at July 30,
1994 versus the balance at January 29, 1994, primarily due to a
smaller number of net store openings in the first six months of
fiscal 1996 versus the first six months of fiscal 1995, coupled
with lower average inventory levels per store.
The increase in net property, plant and equipment is the
result of the company incurring capital expenditures of
approximately $17.3 million in the first six months of fiscal 1996
primarily for the opening of new stores and the renovation of
existing units.
The ratio of accounts payable to merchandise inventory was
32.4% at July 29, 1995 as compared to 36.2% at January 28, 1995.
This decrease is primarily the result of the Company's decision to
reduce the average financing terms of its foreign purchases.
Debt increased $38.9 million to $243.4 million at July 29,
1995 from $204.5 million at January 28, 1995 primarily due to
additional borrowings under the Company's revolving line of credit
to meet seasonal working capital needs and to fund capital
expenditures.
Liquidity and Capital Resources
The Company currently has a $270 million revolving credit
facility on an unsecured basis with Shawmut Bank, N.A., The First
National Bank of Boston, Fleet Bank of Massachusetts, N.A.,
Citizens Savings Bank, NatWest Bank N.A., The Yasuda Trust and
Banking Co., Ltd., Bank Hapoalim B.M., National City Bank,
Columbus, and Standard Chartered Bank (the "Banks"). As amended to
date, the aggregate commitment amount will be reduced by $20
million on October 1, 1995, and by $10 million on each December
29th of 1995 and 1996. The Company currently has a commitment from
certain of the Banks for a $20 million short term revolving loan
for the period from October 1, 1995 through December 29, 1995.
Borrowings under the revolving credit facility bear interest at
variable rates and, at the discretion of the Company, can be in the
form of loans, bankers' acceptances and letters of credit. This
facility expires in June, 1997. As of July 29, 1995, the Company
had outstanding obligations under the revolving credit facility of
$254.8 million, consisting of loans, obligations under bankers'
acceptances and letters of credit.
<PAGE>10
Following is a table showing actual and planned store openings
by division for fiscal 1996:
<TABLE>
<S> <C> <C> <C>
Actual Openings Planned Openings Total
First-Second Third-Fourth Actual/
Division Quarter Fiscal Quarter Fiscal Planned
1996 1996 Openings
--------------- --------------- ----------
Licensed 85 40 125
Parade of Shoes 4 2 6
Fayva 4 0 4
Casual Male 37 33 70
Work 'n Gear 3 4 7
</TABLE>
Offsetting the above actual and planned store openings, the
Company has closed 47 licensed departments, 8 Parade of Shoes store
and 15 Fayva stores during the first half of fiscal 1996, and has
plans to close approximately an additional 34 licensed departments,
19 Parade of Shoes stores and one Work 'n Gear store during the
third and fourth quarters of fiscal 1996.
Also, on September 5, 1995, the Company announced its intent
to dispose of its Fayva footwear division by the end of fiscal
1996. The Company expects that the disposal of the division should
result in a positive impact on liquidity, although there will be a
significant one-time restructuring charge to earnings which is
anticipated to be recorded in the third quarter of fiscal 1996 once
the Company is able to reasonably estimate the value of the charge.
The impact on liquidity and the size of the charge will depend, in
part, on the value the Company is able to realize from the
liquidation of existing Fayva inventory and fixed assets and the
disposition of the Fayva store leases.
The information on store openings and closings reflects
management's current plans and should not be interpreted as an
assurance of actual future developments.
The Company believes that amounts which will be available
under its revolving credit facility and short term revolving loan,
along with internally generated funds, will be sufficient to meet
its operating and capital requirements under ordinary circumstances
through the end of the current fiscal year.
<PAGE>11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
(a) The registrant's annual meeting of stockholders was held
on June 6, 1995 (the "Meeting").
(b) Messrs. J. Christopher Clifford, David Pulver and Jerry M.
Socol were elected Class III directors at the Meeting for a three
year term. The term of office for the following directors
continued after the Meeting: Sherman N. Baker, Ervin D. Cruce,
Nancy Ryan Greenberg, Douglas J. Kahn, Melvin M. Rosenblatt and
Stanley Simon.
(c) The stockholders voted on the election of three Class III
directors, a proposal to approve Performance Share Awards for the
Chief Executive Officer, a proposal to approve an Executive
Compensation Plan for the Chief Executive Officer and the
ratification of the selection of KPMG Peat Marwick as independent
auditors for the fiscal year ending February 3, 1996.
The following votes were cast at the Meeting with respect
to each nominee for Class III director:
<TABLE>
<S> <C> <C>
Total vote for Total vote withheld
each director from each director
-------------- -------------------
J. Christopher Clifford 9,924,339 336,732
David Pulver 9,923,389 337,682
Jerry M. Socol 9,923,854 337,217
</TABLE>
The following votes were cast at the Meeting with respect
to the approval of the Performance Share Awards for the Chief
Executive Officer:
<TABLE>
<S> <C>
For: 9,976,846
Against: 425,836
Abstain: 31,757
Broker non-votes: 26,632
</TABLE>
The following votes were cast at the Meeting with respect
to the approval of the Executive Compensation Plan for the Chief
Executive Officer:
<TABLE>
<S> <C>
For: 9,741,114
Against: 460,558
Abstain: 32,767
Broker non-votes: 26,632
</TABLE>
The following votes were cast at the Meeting with respect
to the ratification of auditors:
<TABLE>
<S> <C>
For: 10,242,966
Against: 5,311
Abstain: 12,794
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The Exhibits in the Exhibit Index are filed as part of
this report.
(b) No reports on Form 8-K were filed by the registrant during
the quarter for which this report is filed.
<PAGE>12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
J. BAKER, INC.
By:/s/Alan I. Weinstein
---------------------
Alan I. Weinstein
Senior Executive Vice President
and Principal Financial Officer
Date: Canton, Massachusetts
September 12, 1995
By:/s/Philip Rosenberg
------------------------
Philip Rosenberg
First Senior Vice President and
Treasurer
(Chief Accounting Officer)
Date: Canton, Massachusetts
September 12, 1995
<PAGE>13
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
EXHIBITS
Filed with
Quarterly Report on Form 10-Q
of
J. BAKER, INC.
555 Turnpike Street
Canton, MA 02021
For the Quarter ended July 29, 1995
<PAGE>14
EXHIBIT INDEX
--------------
Exhibit Page No.
4. Instruments Defining the Rights of Security Holders, Including
--------------------------------------------------------------
Indentures
----------
(.01) Sixth Amendment to Revolving Credit and Loan
Agreement by and among JBI, Inc., et al, dated
September 12, 1995, attached. **
10. Material Contracts
------------------
(.01) Amendment to Employment Agreement between J.
Baker, Inc. and Jerry M. Socol dated June 9,
1994, attached. **
(.02) Amendment to Employment Agreement between J.
Baker, Inc. and Jerry M. Socol dated July 14,
1995, attached. **
(.03) Forgiveness Loan made by James Lee in favor of
Morse Shoe, Inc. dated August 26, 1994,
attached. **
(.04) Promissory Note made by James Lee in favor of
J. Baker, Inc. dated May 19, 1995, attached. **
11. Computation of Primary and Fully Diluted Earnings Per Share **
-----------------------------------------------------------
27. Financial Data Schedule **
-----------------------
** Included herein
<PAGE>15
EXHIBIT 4.01
SIXTH AMENDMENT AGREEMENT
SIXTH AMENDMENT AGREEMENT dated as of September 12,
1995, among JBI, INC., a Massachusetts corporation (the
"Borrower"); J. BAKER, INC., a Massachusetts corporation
("Baker"); each of the banks that is a signatory hereto
(individually, a "Bank" and, collectively, the "Banks"); and
SHAWMUT BANK, N.A., a national banking association, as agent for
the BANKS (in such capacity, together with its successors in such
capacity, the "Agent").
The Borrower, Baker, the Banks and the Agent are
parties to a Revolving Credit and Loan Agreement dated as of
February 1, 1993 (as amended by the First Amendment and Waiver
Agreement relating thereto dated as of November 19, 1993, by the
Second Amendment Agreement relating thereto dated as of April 29,
1994, by the Third Amendment Agreement relating thereto dated as
of December 1, 1994, by the Fourth Amendment Agreement relating
thereto dated as of March 6, 1995 and by the Fifth Amendment
Agreement relating thereto dated as of May 19, 1995, and as in
effect on the date hereof, the "Credit Agreement").
The Borrower and Baker have requested that the Credit
Agreement, the Pledge Agreement and the Security Agreement be
amended to, among other things, amend certain covenants therein,
and the Banks and the Agent are prepared to agree to such
amendments upon the terms and conditions hereof and provide that
the BRIDGE NOTE (as defined below) be secured by a security
interest in the Collateral, as defined in the Pledge Agreement
and the Security Agreement, pari passu with the Obligations owing
to the Banks, and that the Credit Agreement be amended to change
the Prime Margin, the LIBO Margin, the Commitment Fee and the
Commission Rate as defined therein. Accordingly, the parties
hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Agreement, terms defined in the Credit Agreement are used
herein as defined therein.
Section 2. Amendments to the Credit Agreement.
Effective on the Effective Date (as defined in Section 8 hereof),
the Credit Agreement shall be amended as follows:
A. Article I of the Credit Agreement shall be amended
by changing the definitions of "COMMISSION RATE", "FINANCING
AGREEMENTS", "LIBO MARGIN" and "PRIME MARGIN" to read in their
entirety as set forth below, and by adding thereto the new
definitions set forth below (and inserting the same in the
appropriate alphabetical locations):
<PAGE>16
"BRIDGE LENDER" shall mean SHAWMUT and its successors
and permitted assigns under the BRIDGE NOTE.
"BRIDGE NOTE" shall mean the promissory note of the
BORROWER issued to the BRIDGE LENDER in the maximum
principal amount of $20,000,000 payable on December 29,
1995, as the same may be modified, substituted or exchanged
from time to time.
"CALCULATION QUARTER" shall mean, for purposes of
determining the IBO TO EBITDA RATIO on any day for which
such determination is to be used in calculating the LIBO
MARGIN, the PRIME MARGIN, the COMMISSION RATE or the
COMMITMENT FEE, as the case may be, for such day, the fiscal
quarter of BAKER ended on, or most recently ended prior to,
such day.
"COMMISSION RATE" shall mean, (i) for any period during
which RATING LEVEL I is in effect, 1.25% per annum, (ii) for
any period during which RATING LEVEL II is in effect, 1.50%
per annum, (iii) for any period during which RATING LEVEL
III is in effect, 2.00% per annum, (iv) for any period
during which RATING LEVEL IV is in effect, 2.50% per annum,
(v) for any period during which RATING LEVEL V is in effect,
2.75% per annum, and (vi) for any period during which RATING
LEVEL VI is in effect, 3.50% per annum.
"EBITDA" shall mean, for any period of four consecutive
fiscal quarters of BAKER and its SUBSIDIARIES (determined on
a consolidated basis without duplication in accordance with
GAAP), operating income (calculated before depreciation and
amortization expense, interest expense, cumulative effect of
accounting change, taxes and extraordinary and unusual
items) for such period.
"FINANCING AGREEMENTS" shall mean, collectively, this
Agreement, all promissory notes executed and delivered
hereunder, the PLEDGE AGREEMENT and all other pledge
agreements executed and delivered hereunder, the SECURITY
AGREEMENT and all other security agreements executed and
delivered hereunder, the BRIDGE NOTE, and all other
agreements executed pursuant hereto, and all other
agreements of every kind and nature now or hereafter in full
force between the BANKS and the BORROWER, between the AGENT
and the BORROWER and among the BANKS and any third party,
relating to the OBLIGATIONS, as the same may, from time to
time, be amended or supplemented.
"IBO TO EBITDA RATIO" shall mean, for any date of
determination thereof, the ratio of (a) the aggregate amount
of INTEREST BEARING OBLIGATIONS on such date to (b) EBITDA
for the period of four consecutive fiscal quarters of BAKER
ending on, or most recently ended prior to, such date.
"INTEREST BEARING OBLIGATIONS" shall mean, for BAKER
and the SUBSIDIARIES, determined on a consolidated basis in
conformity with GAAP, (a) obligations created, issued or
<PAGE>17
incurred for borrowed money (whether by loan or by the
issuance and sale of debt securities) including, without
limitation, SUBORDINATED INDEBTEDNESS, (b) obligations
arising under bankers' acceptance facilities and (c) any
other obligations which bear interest; provided that in no
event shall INTEREST BEARING OBLIGATIONS include obligations
in respect of letters of credit.
"LIBO MARGIN" shall mean (i) for any period during
which RATING LEVEL I is in effect, 1.25% per annum, (ii) for
any period during which RATING LEVEL II is in effect, 1.50%
per annum, (iii) for any period during which RATING LEVEL
III is in effect, 2.00% per annum, (iv) for any period
during which RATING LEVEL IV is in effect, 2.50% per annum,
(v) for any period during which RATING LEVEL V is in effect,
2.75% per annum, and (vi) for any period during which RATING
LEVEL VI is in effect, 3.50% per annum.
"PRIME MARGIN" shall mean (i) for any period during
which RATING LEVEL I or RATING LEVEL II is in effect, 0.00%
per annum, (ii) for any period during which RATING LEVEL III
is in effect, 0.25% per annum, (iii) for any period during
which RATING LEVEL IV is in effect, 0.50% per annum, (iv)
for any period during which RATING LEVEL V is in effect,
1.00% per annum, and (v) for any period during which RATING
LEVEL VI is in effect, 1.50% per annum.
"RATING LEVEL" shall mean RATING LEVEL I, RATING LEVEL
II, RATING LEVEL III, RATING LEVEL IV, RATING LEVEL V and
RATING LEVEL VI. For purposes of this Agreement, whenever a
RATING LEVEL is stated to be higher or lower than another
RATING LEVEL, the terms "higher" and "lower" shall be
determined on the basis that the highest RATING LEVEL is
RATING LEVEL I and that the lowest RATING LEVEL is RATING
LEVEL VI.
"RATING LEVEL I" shall mean (a) no EVENT OF DEFAULT has
occurred and is continuing and (b) the IBO TO EBITDA RATIO
as at the last day of the CALCULATION QUARTER is equal to or
less than 1.0 to 1; "RATING LEVEL II" shall mean (a) no
EVENT OF DEFAULT has occurred and is continuing, (b) the IBO
TO EBITDA RATIO as at the last day of the CALCULATION
QUARTER is greater than 1.0 to 1 but is equal to or less
than 2.0 to 1 and (c) RATING LEVEL I is not in effect;
"RATING LEVEL III" shall mean (a) no EVENT OF DEFAULT has
occurred and is continuing, (b) the IBO TO EBITDA RATIO as
at the last day of the CALCULATION QUARTER is greater than
2.0 to 1 but is equal to or less than 3.0 to 1 and (c)
neither RATING LEVEL I nor RATING LEVEL II is in effect;
"RATING LEVEL IV" shall mean (a) no EVENT OF DEFAULT has
occurred and is continuing, (b) the IBO TO EBITDA RATIO as
at the last day of the CALCULATION QUARTER is greater than
3.0 to 1 but is equal to or less than 4.0 to 1 and (c) none
of RATING LEVEL I, RATING LEVEL II or RATING LEVEL III is in
effect; "RATING LEVEL V" shall mean (a) no EVENT OF DEFAULT
has occurred and is continuing, (b) the IBO TO EBITDA RATIO
as at the last day of the CALCULATION QUARTER is greater
<PAGE>18
than 4.0 to 1 but is equal to or less than 5.0 to 1 and (c)
none of RATING LEVEL I, RATING LEVEL II, RATING LEVEL III or
RATING LEVEL IV is in effect; and "RATING LEVEL VI" shall
mean none of RATING LEVEL I, RATING LEVEL II, RATING LEVEL
III, RATING LEVEL IV or RATING LEVEL V is in effect;
provided that any change in RATING LEVEL by reason of a
change in the IBO TO EBITDA RATIO as at the last day of any
CALCULATION QUARTER from the IBO TO EBITDA RATIO as at the
last day of the fiscal quarter of the BORROWER immediately
preceding the CALCULATION QUARTER shall become effective on
the first day of the fiscal quarter of the BORROWER next
following receipt by the AGENT of the financial statements
of the BORROWER and its SUBSIDIARIES delivered as required
by Section 9.01(c) hereof; provided further that if the
BORROWER fails to deliver the financial statements of the
BORROWER and its SUBSIDIARIES required by Section 9.01(c)
hereof, RATING LEVEL VI shall apply. The initial RATING
LEVEL hereunder shall be RATING LEVEL IV.
B. With effect on October 1, 1995, Section 3.08 of the
Credit Agreement shall be amended to read in its entirety as
follows:
"3.08 As long as the OBLIGATIONS or any portion
thereof remain outstanding the BORROWER shall pay to the
AGENT, for the account of each Bank, a commitment fee on the
daily average amount of such Bank's COMMITMENT AMOUNT
(whether used or unused), for the period from and including
October 1, 1995 to but not including the earlier of the date
such COMMITMENT AMOUNT is terminated and the TERMINATION
DATE, at a rate per annum equal to (i) for any period during
which RATING LEVEL I is in effect, 0.25%, (ii) for any
period during which RATING LEVEL II is in effect, 0.375%,
(iii) for any period during which RATING LEVEL III, RATING
LEVEL IV or RATING LEVEL V is in effect, 0.50% and (iv) for
any period during which RATING LEVEL VI is in effect, 0.75%.
Accrued COMMITMENT FEE shall be payable quarterly, in
advance, and on the earlier of the date the COMMITMENT
AMOUNTS are terminated and the TERMINATION DATE."
C. Section 10.01.4(a) of the Credit Agreement shall be
amending by inserting at the end thereof:
"Notwithstanding the foregoing, LEVERAGE may be up to, but
not in excess of, 135% at any time during the period from
the last day of the fiscal quarter ending on or about May 1,
1995 to and including the last day of the fiscal quarter
ending on or about November 1, 1995."
D. Section 10.01.5(c) of the Credit Agreement shall be
amended to read in its entirety as follows:
"The applicable percentages to be used in
Section 10.01.5(a) shall be as follows for each of the following
respective periods:
<PAGE>19
<TABLE>
<S> <C>
Period Minimum Percentage
------ ------------------
From the first day of the
FISCAL YEAR beginning on or
about February 1, 1995 to and
including the last day of the
fiscal quarter ending on or
about May 1, 1995 112%
From the first day of the
fiscal quarter beginning on or
about May 1, 1995 to and
including the last day of the
fiscal quarter ending on or
about November 1, 1995 110%
From the first day of the
fiscal quarter beginning on or
about November 1, 1995 to and
including the last day of the
FISCAL YEAR ending on or about
February 1, 1996 112%
From the first day of the
FISCAL YEAR beginning on or
about February 1, 1996 to and
including the last day of the
FISCAL YEAR ending on or about
February 1, 1997 115%
At all times thereafter 125%"
</TABLE>
E. Section 10.01.10(b) of the Credit Agreement shall
be amended to read in its entirety as follows:
"The applicable percentage to be used in Section
10.01.10(a) shall be as follows for each of the following
respective periods:
<TABLE>
<S> <C>
Period Minimum Percentage
------ ------------------
From the first day of the
FISCAL YEAR beginning on or
about February 1, 1995 to and
including the last day of the
fiscal quarter ending on or
about August 1, 1995 250%
From the first day of the
fiscal quarter beginning on or
about August 1, 1995 to and
including the last day of the
fiscal quarter ending on or
about November 1, 1995 230%
<PAGE>20
From the first day of the
fiscal quarter beginning on or
about November 1, 1995 and at
all times thereafter 200%
</TABLE>
F. Section 10.03(g) of the Credit Agreement shall be
amended to read in its entirety as follows:
"(g) Additional INDEBTEDNESS evidenced by the BRIDGE
NOTE; and, so long as there are no loans outstanding under
the BRIDGE NOTE, other INDEBTEDNESS, but not including
INDEBTEDNESS with respect to borrowed money, not exceeding
$5,000,000 in the aggregate outstanding at any one time."
G. Section 11.01 of the Credit Agreement shall be
amended by (1) replacing the period at the end of clause (n)
thereof with "; and" and (2) inserting new clause (o) to read in
its entirety as follows:
"(o) An Event of Default as defined in the BRIDGE NOTE
shall occur and be continuing."
H. Line 2 of Section 15.01 of the Credit Agreement
shall be amended by changing the word "covenant" to "consent" and
line 11 of Section 15.01 of the Credit Agreement shall be amended
by inserting after the word "BANKS" therein, the words
"(including, for the purposes of clauses (d) and (e) of this
Section 15.01 only, the BRIDGE LENDER)".
Section 3. Amendments to Pledge Agreement. Effective
on the Effective Date, the Pledge Agreement shall be amended as
follows:
A. The definition of "Secured Obligations" in Section
1 of the Pledge Agreement shall be amended by relettering clauses
(b) and (c) thereof as clauses (c) and (d), respectively, and
inserting new clause (b) thereof to read in its entirety as
follows:
"and (b) in the case of the Borrower and the Parent
Guarantor, the principal of and interest on the Bridge Note
and all other amounts from time to time owing to the Bridge
Lender by the Borrower under the Bridge Note".
B. Section 4.09 of the Pledge Agreement shall be
amended by inserting in line 4 of the second paragraph thereof,
after the words "Guarantee Agreement", the words "and the Bridge
Note".
<PAGE>21
Section 4. Amendments to Security Agreement.
Effective on the Effective Date, the Security Agreement shall be
amended as follows:
A. The definition of "Secured Obligations" in Section
1 of the Security Agreement shall be amended by relettering
clause (b) thereof as clause (c) and by inserting new clause (b)
thereof to read in its entirety as follows:
"and (b) the principal of and interest on the Bridge Note
and all other amounts whatsoever from time to time owing to
the Bridge Lender under the Bridge Note or the Guarantee
Agreement".
B. Section 4.10 of the Security Agreement shall be
amended by (i) inserting in line 3 of the second paragraph
thereof, after the words "Credit Agreement", the words "and the
Bridge Note" and (ii) inserting in line 4 of the third paragraph
thereof, after the words "Credit Agreement", the words ", or
consisting of the unpaid principal of the loans or other
extensions of credit under the Bridge Note".
Section 5. Acknowledgement under other Financing
Agreements.
(a) Each of the Guarantors (as defined in the
Guarantee), the Agent and the Banks, by its signature
hereto, acknowledges that the Bridge Lender shall be deemed
to be a "Bank" for all purposes of the Guarantee and that
the loans evidenced by the Bridge Note shall be deemed to be
extensions of credit by the Banks to the Borrower for
purposes of the definition of "Guaranteed Obligations" in
Section 1 of the Guarantee.
(b) Each of the Guarantors (as defined in the Pledge
Agreement), the Agent and the Banks, by its signature
hereto, acknowledges that the Bridge Lender shall be deemed
to be a "Bank" for all purposes of the Pledge Agreement and
agrees that the security interest created thereby in favor
of the Bridge Lender shall have the same priority as the
security interest created thereby in favor of the other
Banks.
(c) Each of the Borrower, the Parent Guarantor (as
defined in the Security Agreement), the Agent and the Banks,
by its signature hereto, acknowledges that the Bridge Lender
shall be deemed to be a "Bank" for all purposes of the
Security Agreement and agrees that the security interest
created thereby in favor of the Bridge Lender shall have the
same priority as the security interest created thereby in
favor of the other Banks.
The provisions of the foregoing clauses (b) and (c) are solely
for the purpose of defining the relative rights of the Bridge
Lender and the Banks. Nothing herein shall be construed to
affect the rights against the Borrower, Baker and the Subsidiary
Guarantors of any Bank relative to any other creditor or secured
<PAGE>22
party (other than the Bridge Lender) and nothing herein shall
constitute an agreement by such Bank to subordinate or otherwise
modify the rights of such Bank relative to the rights of such
other creditor or secured party.
Section 6. Prepayments. Notwithstanding anything
contained in the Credit Agreement to the contrary, the Borrower,
by its signature hereto, agrees that it will not reduce the aggregate
amount of the Loans outstanding under the Credit Agreement below the
Aggregate Commitment Amount unless all principal of and interest on
the loans evidenced by the Bridge Note has first been paid in full.
Section 7. Representations and Warranties. Each of
the Borrower and Baker hereby represents and warrants to the
Banks and the Agent as of the Effective Date that, after giving
effect to the amendments set forth herein and to the other
transactions contemplated hereby, (a) no Default has occurred and
is continuing, (b) the representations and warranties set forth
in Article VIII of the Credit Agreement are true and complete as
if made on and as of the Effective Date and as if each reference
in said Article VIII to "this Agreement" included reference to
this Agreement (provided that the representation and warranty set
forth herein shall not be deemed to be inaccurate solely by
reason of the failure of any information contained in any of
Exhibits G (solely as the information therein relates to
Section 8.04 or 8.05 of the Credit Agreement), N, O, P, Q and R
to the Credit Agreement to remain true), (c) the amendments
contemplated by Sections 2, 3 and 4 hereof do not require any
consent under any agreement, instrument or other document
(including, without limitation, the Convertible Subordinated
Notes, the Senior Subordinated Notes and the Subordinated
Convertible Debentures) including, without limitation, any
consent necessary to cause the Loans and the Revolving Notes to
be Obligations to which the Subordinated Indebtedness shall be
subordinated under the subordination agreement(s) referred to in
Section 1.110 of the Credit Agreement. The foregoing shall be
deemed to be representations and warranties made in an Operative
Document for purposes of Section 11.01(d) of the Credit
Agreement.
Section 8. Conditions Precedent. The Effective Date
shall be the date as of which the Agent notifies the Borrower,
Baker and the Banks in writing that it has received (i) an
amendment fee paid by the Borrower to the Agent, for the pro rata
benefit of each Bank that executes and delivers this Agreement,
in an amount equal to 10% of the aggregate Commitment Amounts of
the Banks that execute and deliver this Agreement and (ii) the
following documents, each of which shall be in form and substance
satisfactory to the Agent:
(a) counterparts of this Agreement duly executed and
delivered by each of the parties hereto;
(b) certified copies of the charter and by-laws (or
equivalent documents) of each Obligor (or, in the
<PAGE>23
alternative, a certification to the effect that none of such
documents has been modified since delivery thereof on the
Closing Date pursuant to the Credit Agreement and of all
corporate authority for each Obligor (including, without
limitation, board of director resolutions and evidence of
the incumbency (with specimen signature) of officers for
each Obligor) with respect to the execution, delivery and
performance of (i) in the case of the Borrower and Baker,
this Agreement and the Credit Agreement as amended hereby
and the Bridge Note and (ii) in the case of each other
Obligor this Agreement, and each other document to be
delivered by each Obligor from time to time in connection
with the Credit Agreement as amended hereby (and the Agent
and each Bank may conclusively rely on such certificate
until it receives notice in writing from each Obligor to the
contrary);
(c) an opinion, dated the date hereof, of Goodwin,
Procter & Hoar, counsel to the Obligors, substantially in
the form of Exhibit A hereto and covering such matters
relating hereto as the Agent may require (and each Obligor
hereby instructs such counsel to deliver such opinion to the
Banks and the Agent); and
(d) such other documents relating to the transactions
contemplated by this Agreement as the Agent or any Bank or
special counsel to the Agent may reasonably request.
Section 9. References. All references in the Credit
Agreement and in each Operative Document and Financing Agreement
(including references to the Credit Agreement as amended hereby)
to the "Credit Agreement" (and indirect references thereto such
as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby. All
references in the Credit Agreement and in each Operative Document
and Financing Agreement (including references to the Pledge
Agreement or the Security Agreement, as the case may be, as
amended hereby) to the "Pledge Agreement" and the "Security
Agreement" (and indirect references thereto such as "thereunder",
"thereby", "therein" and "thereof") shall be deemed to be
references to the Pledge Agreement and Security Agreement, each
as amended hereby, respectively.
Section 10. Miscellaneous. Except as expressly herein
provided, the Credit Agreement and all other Operative Documents
and Financing Agreements shall remain unchanged and in full force
and effect. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same amendatory instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. This
Agreement shall be governed by, and construed in accordance with,
the law of The Commonwealth of Massachusetts.
<PAGE>24
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and
year first above written.
JBI, INC.
By /s/Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
J. BAKER, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
SHAWMUT BANK, N.A.
By /s/ Roger A. Stone
---------------------------
Name: Roger A. Stone
Title: Director
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Mitchell B. Feldman
---------------------------
Name: Mitchell B. Feldman
Title: Director
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ Barrie King
---------------------------
Name: Barrie King
Title: Vice President
NATWEST BANK N.A. (formerly
"National Westminster Bank USA")
By /s/ James Maiorino
---------------------------
Name: James Maiorino
Title: Vice President
<PAGE>25
BANK HAPOALIM B.M.
By /s/ Martin B. Goodstine
---------------------------
Name: Martin B. Goodstine
Title: Vice President
NATIONAL CITY BANK, COLUMBUS
By /s/ Ralph A. Kaparos
---------------------------
Name: Ralph A. Kaparos
Title: Sr. Vice President
THE YASUDA TRUST AND BANKING
COMPANY, LTD.
By /s/ Makoto Tagawa
---------------------------
Name: Makoto Tagawa
Title: Deputy General Manager
SHAWMUT BANK, N.A.,
as Agent
By /s/ Roger A. Stone
---------------------------
Name: Roger A. Stone
Title: Director
We hereby acknowledge, consent
and agree to the terms of the
foregoing Sixth Amendment
Agreement and confirm that
our obligations under the
Guarantee and the Pledge
Agreement shall remain
unchanged and in full
force and effect.
<PAGE>26
Dated: September 12, 1995
SPENCER COMPANIES, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
SPENCER NO. 301 CORP.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
JBI HOLDING CO., INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: President
THE CASUAL MALE, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
TCMB&T, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
WGS CORP.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
TCM HOLDING COMPANY, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: President
MORSE SHOE, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
<PAGE>27
BUCKMIN, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
ELM EQUIPMENT CORP.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
JARED CORPORATION
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
MORSE SHOE (CANADA) LTD.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
MORSE SHOE INTERNATIONAL, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
ISAB, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
WHITE CAP FOOTWEAR, INC.
By /s/ Alan I. Weinstein
---------------------------
Name: Alan I. Weinstein
Title: Sr. Exec. Vice President
<PAGE>28
EXHIBIT 10.01
AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED MARCH 25, 1993
Reference is made to the Executive Employment Agreement dated
as of March 25, 1993 (the Agreement) by and between J. Baker, Inc.
and Jerry M. Socol. Pursuant to paragraph 19 of the Agreement and
in order to amend certain provisions of the Agreement, the
Agreement is hereby amended as follows:
1. Paragraph 3 (a) of the Agreement entitled "Base Salary"
is hereby amended by deleting the figure "$425,000" in the third
line thereof and inserting in its place the figure "$450,000".
2. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on April 1, 1995" in the fifth line
thereof and inserting in its place the phrase "ending on April 1,
1996".
3. All other terms of the Agreement shall remain unchanged
and continue in full force and effect.
J. BAKER, INC.
/s/ Sherman N. Baker June 9, 1994
--------------------------- ---------------
By: Sherman N. Baker Date
Chairman of the Board
/s/ Jerry M. Socol June 9, 1994
--------------------------- ---------------
Jerry M. Socol Date
<PAGE>29
EXHIBIT 10.02
SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED MARCH 25, 1993
Reference is made to the Executive Employment Agreement dated
as of March 25, 1993 (the Agreement) by and between J. Baker, Inc.
and Jerry M. Socol. Pursuant to paragraph 19 of the Agreement and
in order to further amend certain provisions of the Agreement, the
Agreement is hereby further amended as follows:
1. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on April 1, 1996" in the fifth line
thereof and inserting in its place the phrase "ending on April 1,
1997".
2. All other terms of the Agreement shall remain unchanged
and continue in full force and effect.
J. BAKER, INC.
/s/ Sherman N. Baker July 14, 1995
--------------------------- ---------------
By: Sherman N. Baker Date
Chairman of the Board
/s/ Jerry M. Socol July 14, 1995
--------------------------- ---------------
Jerry M. Socol Date
<PAGE>30
EXHIBIT 10.03
FORGIVENESS LOAN
$30,000 Canton, Massachusetts August 26, 1994
For value received, the undersigned, James D. Lee ("Borrower"),
promises to pay to the order of Morse Shoe, Inc., a Delaware
corporation ("Lender"), Thirty Thousand Dollars ($30,000.00).
Borrower will be employed by Lender. If Borrower remains employed
by Lender, J. Baker, Inc., a Massachusetts corporation and the
parent corporation of Lender or any company directly or indirectly
controlled by J. Baker, Inc. (collectively, with Lender, the
"Company") through the following dates, the outstanding principal
amount of this Note shall automatically be reduced to the amount
indicated:
Outstanding
Date Principal Amount
Prior to 1 year anniversary from Date-of-Hire $30,000.00
1 year anniversary from Date-of-Hire $20,000.00
2 year anniversary from Date-of-Hire $10,000.00
3 year anniversary from Date-of-Hire 0.00
In any event, if Borrower remains employed by the Company through
July 11, 1997, all of Borrower's obligations under this Note shall
automatically be satisfied in full.
Borrower shall be responsible for any federal, state or local taxes
which may be payable as a result of the Loan or forgiveness of the
Loan whereas this forgiveness shall be considered taxable income.
If Borrower at any time after July 11, 1994 and prior to July 11,
1997 is no longer employed by the Company, the Outstanding
Principal Amount of this Note shall be due and payable as set forth
herein. In the event of a resignation by Borrower of employment
with the Company, or if Borrower is terminated for "cause", which
shall mean proven or confessed dishonesty or a willful and material
failure by Borrower to perform his duties, the Outstanding
Principal Amount shall be due thirty (30) days from the date of
resignation or termination of employment. If Borrower is
terminated by the Company for any other reason, the Outstanding
Principal Amount shall be due twelve (12) months from the date of
termination of employment or, in the event of the sale of
Borrower's primary residence (the "Residence"), the date of closing
of sale of the Residence. In the specific instance where the
Company eliminates the position of Senior Vice President - Fayva
Distribution and Planning, and the Company does not reassign
Borrower into another position within the Company, this note will
become void and does not have to be repaid. For purposes of the
foregoing, the creation by the Company of a substantially similar
position, or renaming of the position of Senior Vice President -
Fayva Distribution and Planning, will not be deemed to be an
elimination of the position for the purposes hereof.
<PAGE>31
James Lee
Forgiveness Loan
August 26, 1994
Page 2
For as long as Borrower remains employed by the Company, this Note
shall not bear any interest. Note that under Internal Revenue Code
sec 7872, the IRS requires, with respect to non-interest bearing
loans, that interest be imputed as of the last day of the calendar
year (for all years in which the loan is outstanding) at the
statutory federal interest rate. This imputed interest is treated
as compensation income and is subject to federal and state income
tax. The current statutory federal interest rate for this purpose
is 4.8%.
However, from the date thirty (30) days after the first date that
Borrower is no longer employed by the Company, for any reason,
interest on the Outstanding Principal Amount shall accrue and be
payable on the last day of each month, in arrears, at an interest
rate per annum of nine percent (9%). Interest will be computed on
the basis of a 360-day year, compounded monthly.
Any and all deposits or other sums at any time or times credited by
or due from the holder to, and all securities or other property in
possession of the holder from safekeeping or otherwise and
belonging to, the Borrower any indorser, or guarantor of this Note
are and shall be subject to a security interest in favor of the
holder to secure payment of this Note.
Upon non-payment of this Note or any interest due hereunder
whenever due, and at any time or times thereafter, without any
demand or notice, except to such extent as notice may be required
by applicable law, the holder may apply or set off such deposits or
other sums. The provisions of this paragraph are cumulative to,
and not exclusive of, any other rights that the holder has or may
have in the future with respect to such deposits or sums under
other agreements or applicable principals of law.
Every maker, indorser, and guarantor of this Note, or the
obligation represented by this Note, waives presentment, demand,
notice, protest, and all other demands or notices, in connection
with the delivery, acceptance, indorsement, performance, default,
or enforcement of this Note, assets to any and all extensions or
postponements of the time of payment or any other indulgence, to
any substitution, exchange, or release of collateral, and/or to the
addition or release of any other party or person primarily or
secondarily liable, and generally waives all suretyship defenses
and defenses in the nature thereof.
<PAGE>32
James Lee
Forgiveness Loan
August 26, 1994
Page 3
In the event of the death of Borrower, the Outstanding Principal
Amount shall be due in full from Borrower's estate.
Nothing contained herein shall be construed as creating an
employment contract and Borrower's employment with Lender and
Lender's employment of Borrower, shall be at-will and terminable at
any time by either Lender or Borrower, with or without cause.
No delay or omission of the holder in exercising any right or
remedy hereunder shall constitute a waiver of any such right or
remedy. Acceptance by the holder of any payment after acceleration
shall not be deemed a waiver of such acceleration. A waiver on one
occasion shall not operate as a bar to or waiver of any such right
or remedy on any future occasion.
The "Date-of-Hire" shall be July 11, 1994.
The "holder" as used in this Note shall mean Lender or any payee or
indorsee of this Note who is in possession of it or the bearer if
this Note is at the time payable to bearer.
This Note shall inure to the benefit of Lender and its successors
and assigns. This Note shall be binding upon Borrower and its
successors.
Any notice, request or other communication pursuant to this Note
shall be deemed duly given if hand-delivered or mailed by certified
or registered mail addressed, in the case of notice to Borrower, to
him at 90 Far Reach Road, Westwood, Massachusetts 02090, and in
the case of notice to Lender, to it at 555 Turnpike Street, Canton,
Massachusetts 02021, Attention: Chief Financial Officer or to
such other address as either Borrower or Lender may otherwise
designate in writing as his or its address for receiving notices
hereunder.
The Borrower will pay all costs and expenses of collection
including attorney's fees incurred or paid by the holder in
enforcing this Note or the obligations hereby evidenced, to the
fullest extent permitted by law.
Subject to applicable law, this Note may be amended, modified, and
supplemented only with the written agreement of Lender and may not
be assigned by Borrower.
<PAGE>33
James Lee
Forgiveness Loan
August 26, 1994
Page 4
This Note shall be deemed to be under seal and shall be governed
and construed according to the laws of the Commonwealth of
Massachusetts without reference to the principles of conflict of
law thereof.
/s/ James Lee
-------------------------
Mr. James Lee
90 Far Reach Road
Westwood, MA 02090
<PAGE>34
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per Share*
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended Six Months Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
PRIMARY:
Net Earnings $1,397,212 $7,133,315 $ 2,034,865 $10,331,100
Weighted average number of common
shares outstanding 13,847,954 13,833,796 13,846,875 13,823,597
Earnings Per Share $0.101 $0.516 $0.147 $0.747
ASSUMING FULL DILUTION:
Net Earnings (1) $1,397,212 $7,917,315 $2,034,865 $11,899,100
Weighted average number of common
shares outstanding 13,847,954 13,833,796 13,846,875 13,823,597
Dilutive effect of outstanding
stock options 84,800 234,374 98,977 254,590
Dilutive effect of convertible
subordinated debt - 4,341,085 - 4,341,085
Weighted average number of common
shares as adjusted 13,932,754 18,409,255 13,945,852 18,419,272
Earnings Per Share $0.100 $0.430 $0.146 $0.646
(1) For the purpose of calculating fully diluted earnings per share
for the quarter and six months ended July 30, 1994, the
conversion of the 7% convertible debt results in an after tax
benefit from reduced interest expense.
* This calculation is submitted in accordance with Item
601(b)(11) of Regulation S-K.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF J. BAKER, INC. FOR THE QUARTER ENDED JULY 29, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> JUL-29-1995
<CASH> 1,860,980
<SECURITIES> 0
<RECEIVABLES> 28,424,670
<ALLOWANCES> 0
<INVENTORY> 356,082,715
<CURRENT-ASSETS> 398,509,277
<PP&E> 206,676,884
<DEPRECIATION> (68,447,955)
<TOTAL-ASSETS> 607,170,487
<CURRENT-LIABILITIES> 128,338,770
<BONDS> 243,441,772
<COMMON> 6,929,313
0
0
<OTHER-SE> 218,093,623
<TOTAL-LIABILITY-AND-EQUITY> 607,170,487
<SALES> 503,904,731
<TOTAL-REVENUES> 503,904,731
<CGS> 280,170,560
<TOTAL-COSTS> 280,170,560
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,286,696
<INCOME-PRETAX> 3,307,865
<INCOME-TAX> 1,273,000
<INCOME-CONTINUING> 2,034,865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,034,865
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
EXHIBIT 10.04
J. Baker, Inc. and Subsidiaries
Promissory Note
Name: JAMES LEE Social Security #: ###-##-####
-------------------- --------------------
Store or Dept. Name and Location: J. Baker, Inc., 555 Turnpike
Street, Canton, MA 02021
Amount: $ 75,000.00xx Date: May 19, 1995
--------------------------- ---------------------
For value received, the undersigned James Lee (the "Payor")
promises to pay to the order of J. Baker Inc. or its assignees (the
"Holder") at 555 Turnpike Street, Canton, MA 02021 or at such other
place as may be designated in writing by the Holder, the principal
sum of Seventy-Five Thousand ($75,000.00) Dollars on January 26,
1997 (the "Maturity Date") plus interest on the principal balance
thereof at a rate of ( 7.6%) per cent per annum. Interest on this
note shall be payable in consecutive monthly installments
commencing on the 19th day of June, 1995 and on the 19th day of
each and every month thereafter. The entire principal balance of
this Note, together with all remaining accrued and unpaid interest
thereon shall be due and payable on the Maturity Date.
Total repayment (principal plus interest) will be $84,609.61 set
forth on attached Schedule A.
PRE-PAYMENT
The unpaid principal hereof together with all unpaid interest
accruing may be prepaid in whole or in part at any time without
premium or penalty. All prepayments shall be applied first to
accrued interest on such prepayment and second against the
principal.
EVENTS OF DEFAULT
a. The entire unpaid balance of this Note together with accrued
interest thereon shall become immediately due and payable at the
option of the Holder, without notice to the Payor, upon the
happening of any one or more of the following events (an "Event of
Default"):
[i] Payor has failed to pay the principal sum or
interest on this Note on the date such payment is due;
[ii] Payor has failed to perform any of the terms,
conditions, covenants or provisions of this Note; or
[iii] Payor's employment with J. Baker Inc. or any of
its subsidiaries is terminated for any reason whatsoever.
b. Upon an Event of Default, and notwithstanding any other
interest rate set forth herein, interest shall accrue on the entire
unpaid principal balance of this Note from and including the
date of such default at the annual simple interest rate of eighteen
(18%) percent per annum.
c. The Payor will pay all costs and expenses of collection
including attorney's fees incurred or paid by the Holder in
enforcing this Note or the obligations hereby evidenced, to the
fullest extent permitted by law.
WAIVER OF PRESENTMENT/DEMAND
The Payor hereby waives presentment, demand for payment, notice of
dishonor, protest and notice of protest and any or all other
notices or demands in connection with the delivery, acceptance and
performance of this Note. No waiver of or modification to this
Note or any part hereof shall be effective unless contained in
writing signed by the party against whom enforcement of such waiver
or modification is sought.
RIGHT OF SET-OFF
Upon the occurrence and during the continuance of any Event of
Default, the Holder hereby is authorized at any time and from time
to time, without notice to the Payor, to set-off and apply any and
all indebtedness at any time owing by the Holder to or for the
credit, account or benefit of the Payor against any and all of the
principal sum or interest now or hereafter existing under this Note
whether or not the Holder shall have declared a default,
accelerated the obligations or made any demand or taken any other
action under this Note and although such obligations may be
unmatured. Without limiting the foregoing, the Payor hereby grants
to the Holder a continuing security interest in and to all such
indebtedness in the possession of the Holder and the Payor hereby
authorizes the Holder to set-off and apply such amounts at such
times and in such manner as the Holder may direct pursuant to this
Section.
GOVERNING LAW
This Note is a Massachusetts contract, and the rights and
obligations of the parties shall be governed by the laws of the
Commonwealth of Massachusetts. In the event that any provision or
clause of this Note conflicts with applicable law, such conflict
shall not affect the other provisions of this Note which can be
given effect without the conflicting provision. The undersigned
agrees to submit to jurisdiction in a court in the Commonwealth of
Massachusetts. The Payor and the Holder hereby waive trial by
jury.
EXECUTED AS A SEALED INSTRUMENT THIS 24TH DAY OF JUNE, 1995
Signature of Payor /s/ James Lee
----------------------------------------
Witness to Signature /s/ Karen McLain
----------------------------------------
FOR OFFICE USE ONLY:
----------------------------------- ---------------
Authorized Corporate Signature: Date
/s/ Philip Rosenberg May 19, 1995
----------------------------------- ---------------
Treasurer/C.F.O.: Date
----------------------------------- ---------------
Processed by HR/Payroll Date
SCHEDULE A
Loan Repayment Schedule
James Lee
Simple Interest Note
Principal: $75,000.00
Interest Rate: 7.60%
Loan Origination Date: 05/19/95
Loan Payoff Date: 01/26/97
Days Outstanding: 618
<TABLE>
<S> <C> <c)
19-Jun-95 $475.00
19-Jul-95 $475.00
19-Aug-95 $475.00
19-Sep-95 $475.00
19-Oct-95 $475.00
19-Nov-95 $475.00
19-Dec-95 $475.00
19-Jan-96 $475.00
19-Feb-96 $475.00
19-Mar-96 $475.00
19-Apr-96 $475.00
19-May-96 $475.00
19-Jun-96 $475.00
19-Jul-96 $475.00
19-Aug-96 $475.00
19-Sep-96 $475.00
19-Oct-96 $475.00
19-Nov-96 $475.00
19-Dec-96 $475.00
19-Jan-97 $475.00
26-Jan-97 $75,109.61
Total Repayment $84,609.61
</TABLE>
